Investment Column: Icap falter won't stop it being champion

Monitise; Telecom Plus

Our view: Buy

Share price: 482.1p (+1.4p)

A rarity from Icap yesterday: figures for the first quarter for once didn't really sparkle compared with the same period last year.

But let's be fair, back then the company, which facilitates the trading of a huge range of financial instruments between banks and other financial firms, benefited from a rash of market volatility caused by the "flash crash" back in May.

And this year there were an "unusual number of bank holidays" affecting the City of London – read, the Royal Wedding – further depressing revenues. So a 4 per cent fall is of little concern and in line with expectations. Activity has also picked up since the start of June and growth has returned. That can only continue.

As central banks' views on where interest rates should be diverge, Icap will benefit from the volatility and a pick-up in derivatives trading as banks try to call the market.

And although the prevailing push for regulatory change, including demands that trading in various financial instruments become more transparent, might look like a problem for inter-dealer brokers, such steps should actually benefit Icap by driving business through its doors. In fact, companies such as Icap are looking more and more like exchanges and there has been a flurry of consolidation activity in that sector.

Interestingly, it has yet to affect Icap's sub-sector. There are five main players, although Icap is the star. If there is a push to reduce that number, its power is such that it could sit back and watch while rivals get distracted by mergers, or it may simply gobble one or two up. The former is most likely, but Icap is fleet-footed enough to be opportunistic.

Given its quality, position and record, the 13 times forecast full-year earnings that its shares trade on is undemanding. Some analysts fancy smaller rival Tullett Prebon, trading on just eight times. But then, some pundits fancied David Haye to beat Wladimir Klitschko in their recent boxing match. We all know how that one turned out. In the end, class wins.

Telecom Plus

Our view: Buy

Share price: 37.5p (+3p)

Monitise is a leading player in the fast-growing world of mobile payments, with solutions that allow lenders and the like to offer their customers ways to bank on their mobile phones. And the growth in this market was reflected in the company's pre-close update, which was published yesterday. Annual revenues, Monitise said, were set to come in at around £14m, or more than double the amount reported last year. At the same time, it reported a "strong increase in operating profit and cash generation" over the second half of its financial year. Oh, and did we mention that the group is "well positioned to double revenue again" in the new financial year?

The company is clearly on the right track. The momentum is such that we would not be surprised if it keeps surpassing analysts' hopes. Before the bears grumble, we admit that it is easy to get carried away with technology. But we would add that, unlike some so-called "stars", Monitise actually is making money.

Telecom Plus

Our view: Buy

Share price: 681.5p (-17.5p)

Telecom Plus is a multi-utility reseller, providing gas, electricity, phone and broadband to residential and business customers. And, according to investors and analysts, it has been making a rather good job of it. The group announced its first-quarter numbers yesterday, revealing that it had experienced growth in customers, distributors and services. This came alongside strong cash generation, while management forecast a significant growth in profit-ability in the first half of the year.

In all, it added 7,388 new customers, bringing the total to 378,738. The number of services was up by 38,140. This gives the company good visibility on long-term profits.

Management expects organic growth to continue increasing over the coming months, driven by new distributors. The company is also investing heavily in overhauling its online operation. But while the performance has been impressive, so has the strength in its share price, up 47 per cent over the past six weeks.

Peel Hunt has the stock on a price of 20.8 times estimated full-year earnings, which is quite punchy, but, given the visibility on the road ahead, we believe there is more to come.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Digital Marketing Exec / Online Marketing Executive

£35 - 40k: Guru Careers: Our client has a new role for a Digital Marketing Exe...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'